Chairwoman Clyburn Takes the Floor

By Brad

Via John Eggerton of Broadcasting & Cable, acting FCC Chairwoman Mignon Clyburn reiterated the Commission’s focus on mobile broadband while maintaining a “light” regulatory touch:

In her first speech as acting FCC chairwoman, Mignon Clyburn told a CTIA convention audience in Las Vegas Tuesday (May 21), that “maximizing the benefits of mobile communications will continue to be a top priority for the FCC” and that “mobile innovation is key to U.S. competitiveness.”

She said the FCC is on track to issue incentive auction rules by the end of the year.

Agenda Items for the Next FCC Chairman

By Jamal Simmons

It’s official: current Federal Communications Commission (FCC) Chairman Julius Genachowski will be handing over the gavel on May 17th. While Commissioner Mignon Clyburn will lead the agency until Obama nominee Tom Wheeler gets confirmed and sworn in, it’s worth taking a look at the top two pressing issues Wheeler will face once he takes the helm of the Commission.

Agenda Item: IP Transition

The trend is undeniable. Americans are leaving their traditional phone service, dropping their standard connection in favor of wireless and IP-based phone connections. You’re probably one of them. If you have your home phone service bundled with cable, you might not even realize you no longer rely on the plain old telephone service (POTS) network.

With scores of people changing the way they communicate (some estimates peg the number at 500,000 people each month), network providers want to gradually sunset their old networks so they can concentrate billions in investment dollars to new, Internet-based services. In other words, they want to put their money where consumers want to go … and are going.

This transition to all-IP (Internet Protocol) networks won’t be as easy as flipping a switch. Ensuring everyone still has a reliable connection, especially seniors and those living in rural areas, is critical. That’s why AT&T submitted a proposal to the FCC for “beta trials” in select markets to identify potential pitfalls, an idea FCC Commission Ajit Pai strongly endorsed in a speech sponsored by the Hudson Institute back in March. As Pai said in his speech:

Right now, the most critical choice we face is whether to move forward with an All-IP Pilot Program. This program would allow forward-looking companies to choose a discrete set of wire centers where they could turn off their old TDM electronics and migrate consumers to an all-IP platform. Now, you may have noticed that when it comes to the IP transition, everyone has a prediction about what will or will not happen if carriers are allowed to provide services exclusively through an all-IP platform. But as we found out during yesterday’s “snowstorm”—what we Kansans call “weather”—predictions are no substitute for hard facts. Albert Einstein had it right: A “pretty experiment is in itself often more valuable than twenty formulae extracted from our minds.”

Fortunately, we don’t need to rely on formulae any longer. The FCC has sought and received comments on a proposal to create an All-IP Pilot Program. I’ve reviewed the record carefully. And having done so, I am proposing today that the FCC move forward with this program.

Going forward with beta trials is just part of the greater IP transition discussion Wheeler will no doubt be having as head of the FCC. Also on the burner will be regulations — specifically, what will be the regulatory framework in an all-IP world? The 1996 Telecommunications Act is by all accounts painfully outdated. Modernizing rules to keep pace with today’s technology in ways that encourage continued investment in network infrastructure and protect consumers will be critical for the IP transition to succeed. And Wheeler, from the driver’s seat of the FCC, will need to lead the discussion.

Agenda Item: Spectrum

Outgoing Chairman Julius Genachowski deserves a ton of credit for recognizing the coming “spectrum crunch” (as he’s coined it), but the FCC’s proposed solution to the problem — incentive spectrum auctions — is barely past the 50-yard line. The auctions are still being shaped, the details still being argued over. Some are pushing for limited involvement in the auctions by certain wireless providers. Others question whether enough broadcasters will participate to make a difference.

Meanwhile, thousands of Americans are adopting mobile broadband every day. They are firing up smartphones and tablets for the first time and pushing data into the ether. And all that data is joining the bits and bytes being pushed out from tens of millions of other people who are already relying on a wireless connection to the Internet for their daily activities.

To keep up with this flood of data traveling on their networks, wireless providers have been trying to make deals for spectrum left and right. But it’s still not enough, which means a lot will be riding on the FCC’s spectrum auctions. Will Wheeler and the other Commissioners successfully put together proceedings that are open to all qualified bidders? Auctions that maximize much-needed revenue for the Federal government? As my colleague Rick Boucher succinctly put it:

Only through truly competitive, open spectrum auctions will America’s wireless industry continue to thrive. After all, the best way to ensure competition is to encourage everyone to compete.

These are the two most critical issues Wheeler will face once he’s in charge of the FCC (and underlying both of those issues is the most important part of his job — increasing access for all Americans to participate in the technological revolution we are experiencing. High-speed access to the Internet only increases in importance as job searches, entrepreneurial opportunities, education and health care are all enhanced by being online). While some have criticized his selection given his past life running both the NCTA and the CTIA, such experience offers encouragement that he has the ability to successfully get the job done. As President Obama remarked during the announcement of his selection:

”If anybody is wondering about Tom’s qualifications… [He] is the only member of both the cable television and the wireless industry hall of fame.”

Here’s hoping Wheeler will one day be inducted into the FCC hall of fame as well.

Helping, Not Hurting Consumers

By Brad

In an op-ed for the Huffington Post, American Consumer Institute for Citizen Research President Steve Pociask worries the FCC may end up hurting consumers with its upcoming spectrum incentive auctions:

A basic principle of any well-designed auction process is that it is open and competitive. However, there are some unsettling news reports that this basic principle may be in jeopardy. For one, there has been some recent coaxing by the Department of Justice that the FCC may want to consider favoring its auction to benefit some small wireless providers over larger ones. Along the same lines, there have been suggestions that the FCC may consider rules to prevent the largest two wireless providers, AT&T and Verizon, from participating in the upcoming auctions. If recent headlines and comments from the FCC Chairman are any indication, Sprint and T-Mobile are “getting stronger” and the reality remains: “Every mobile operator out there, including the largest ones, needs more spectrum.”

Here is the problem—protecting competitors does not help competition, and that hurts consumers. Any action by the FCC that would intentionally benefit some competitors at the expense of others runs counter to the intent of Congress to constrain the FCC’s ability to limit participation in the upcoming spectrum auctions. When it comes to picking favorites in the market, that choice should stay with consumers, not regulators.

Back in February, our own Honorary Chairman Rick Boucher had similar thoughts on the FCC’s auctions:

History has shown that when the FCC has tried to pick winners and losers in the wireless market, American consumers have lost. Past attempts by the Commission to favor certain bidders and/or impose rigid regulations on auction winners have drastically diminished auction proceeds, left major blocks of spectrum unused, and led to what FCC Chairman Julius Genachowski himself has labeled “America’s looming spectrum crisis.”

Leading the Charge

By Brad

In a piece for Politic365, Hispanic Leadership Fund President Mario H. Lopez (HLF is an IIA Member) writes about how the Hispanic community is leading the charge in adopting mobile broadband:

The modern Hispanic community is not only going mobile, but it’s outpacing the general population in doing so. Survey data tells an incredible story of how far our community has come in a short time in adopting new technologies. ComScore tells us that in two years (2010-2012), Hispanic adoption of smartphones increased from 43 percent to 57 percent whereas adoption of smartphones among the general population increased from 36 percent to 46 percent. And as recent data from Pew shows, 76 percent of Hispanics are more likely to use their mobile devices to go online.

Mobile Internet connectivity gives Hispanics access to the civic, health, social, and entertainment content that they crave. At a time when economic growth and employment remains sluggish, mobile Internet access allows Hispanics to search for work and take advantage of online training and education. Mobile Internet also keeps Hispanic entrepreneurs and innovators connected to their customers.

Keeping this positive trend going, Lopez argues, will take smart regulatory policy:

Opportunities available to Hispanics are on the rise, and our community is leveraging the economic and social benefits of mobile broadband to make the most of them. Policymakers in Washington must recognize this growing trend and do everything in the power to support it. In recent years the FCC has made some progress on the spectrum front.

It will be important for successors to outgoing FCC Chairman Julius Genachowski and Commissioner Robert McDowell to speed up that progress and act upon the need to free up more spectrum for commercial use. The use of broadband connectivity will continue to be a crucial factor in creating jobs and economic growth, spurring innovation, and generating educational opportunities for all Americans.

Making a Play For Sprint

By Brad

Last week, satellite TV provider DISH announced it was making a play to purchase wireless provider Sprint for a price just north of $25 billion, or some $5 billion more than Japanese provider SoftBank had offered to buy the carrier. And as Phil Goldstein of Fierce Wireless reports, DISH is taking a patriotic angle to promote its bid:

Dish said its offer for Sprint “is better for the American consumer, better for Sprint’s shareholders, and better for U.S. national security than the SoftBank proposal.”

Dish’s comments are likely a reference to concerns about foreign ownership of domestic telecommunications companies as well as specific concerns that Sprint could use equipment from Chinese vendors ZTE and Huawei in its network.

Goldstein also reports that Sprint has formed a “special committee on its board” to go through DISH’s offer.

Deal of the Day

By Brad

For years now, satellite TV provider Dish Network has been making noises about jumping into the wireless game. Now, Peter Svensson of the Associated Press reports, they’ve put together a blockbuster deal:

Dish Network Corp. is trying to snag U.S. wireless carrier Sprint Nextel Corp. away from its Japanese suitor in recognition of the way satellite dishes are losing their relevance in the age of cellphones that play YouTube videos.

Dish offered $25.5 billion in cash and stock on Monday for Sprint, which Dish says beats the offer from Japan’s Softbank Corp. Softbank is offering $20 billion in cash, and shareholders get to keep 30 percent of Sprint. Dish is offering $17.3 billion in cash, and Sprint shareholders get 32 percent of the combined Dish-Sprint.

Sprint already leads all other U.S. carriers when it comes to spectrum holdings, so its combination with Dish — which currently controls a lot of spectrum of its own — may be a big hurdle with regulators. Still, given the pokiness of regulatory relief when it comes to wireless and spectrum, proposed deals such as this one shouldn’t be surprising. Stay tuned.

More Spectrum, Less Problems

By Brad

Our Co-Chairman Jamal Simmons recently talked with Marc Strassman of Etopia News about our look at the evolution of March Madness online, the IP transition, the need for spectrum dedicated to wireless, and more. Here’s one of a number of clips we’ll be posting over the next few days.

The full interview is available at Etopia News.

Blocking B-block

By Bruce Mehlman

A recent agreement between Verizon and AT&T over spectrum holdings has inspired complaints from the usual suspects.

In the agreement, AT&T will pay close to $2 billion to acquire 39 of Verizon’s lower 700 MHz B-block licenses. While that sounds complicated, all it really means is two innovators in a highly competitive industry have found a neat way to solve mutual problems… You know, the free market in action. And as with any free market solution to a problem—especially in the wireless industry—there are other competitors and interest groups aiming to block the deal from going forward.

It’s no secret the wireless industry is scrambling to keep up with consumer demand. To the delight of chiropractors everywhere, we are now a nation of slouchers, spending our days hunched over tiny screens. All this activity on our devices creates data, and all that data needs spectrum to travel from point A to point B. As a result, the airwaves are getting more and more crowded—a problem outgoing FCC Chairman Julius Genachowski accurately labeled the “spectrum crunch.”

The Commission’s upcoming spectrum incentive auctions will hopefully go a long way toward easing this crunch. But let’s face it, government is about as nimble as an iceberg, which means wireless providers need more than years-away government action to meet the needs of their customers. Since it’s impossible for the regulatory grind to keep up with consumer habits, it will take free market solutions to keep wireless customers satisfied.

Few technologies have been as quickly adopted as mobile broadband, and as a result, the wireless industry is a victim of its own success. With government assistance in freeing up airwaves a minefield of red tape, blocking deals between providers for spectrum drags the entire industry down. Companies like Verizon and AT&T are motivated by the need to please their customers. The question is, what motivates those trying to block them from doing so?

What Will Make the IP Transition Successful?

By Brad

Our Co-Chairman Jamal Simmons recently talked with Marc Strassman of Etopia News about our look at the evolution of March Madness online, the IP transition, the need for spectrum dedicated to wireless, and more. Here’s one of a number of clips we’ll be posting over the next few days.

The full interview is available at Etopia News.

The Search for a New Chair

By Brad

Over at The Hill, Brendan Sasso warns President Obama is headed into a “political minefield” as he mulls a successor to FCC Chairman Julius Genachowski:

It’s an important choice for Obama, as the next chairman will face difficult decisions over how to provide enough airwaves for mobile devices, preserve the openness of the Internet and promote competition.

Tom Wheeler, a venture capitalist and fundraiser for Obama, was considered the clear favorite for the job just last week. But then a coalition of public interest groups sent a letter to the president bashing him, and 37 senators signed a letter supporting an alternative pick: FCC Commissioner Jessica Rosenworcel.

“Wheeler is still the front runner, but it isn’t as secure as it was a week or two ago,” another industry watcher said.

Quick Talk With Genachowski

By Brad

Speaking of the FCC, John Eggerton of Broadcasting & Cable has a short interview with outgoing Chairman Julius Genachowski. Here’s a taste, regarding the Commission’s upcoming spectrum auctions:

You mentioned incentive auctions. You are leaving with the incentive auctions still at the beginning of the process. What shape is it in?

In 2009, when I rang the alarm bell on a spectrum crunch, people said there was no spectrum crunch. In early 2010, when we introduced the incentive auction idea, people said that would never happen. The goals that I set out were to get the country focused on spectrum crunch, get the legislation passed and move forward on other steps to free up licensed and unlicensed spectrum. Things have moved much faster than anyone would have thought, and much more has gotten done than anyone would have predicted. Having said that, there are challenges ahead and they will be with us for a very long time. That is why one of the things I focused on was strengthening the agency so that it could continue to do the work of the American people for a very long time.

The full interview is worth checking out.

A Boon for the Economy

By Brad

In a smart op-ed for Politico, former FCC official David Goodfriend and former White House senior member Brad Blakeman make the case that freeing up more spectrum for wireless and accelerating the transition to all-IP networks will be a boon for the American economy:

The FCC can build on the proven economic engine of wireless networks and address the current spectrum shortage by identifying additional spectrum that can be allocated and auctioned to wireless providers for their exclusive use to serve America’s mobile consumers. The agency also can move quickly to carry out a congressional mandate that recently relinquished broadcaster spectrum be made available at auction and re-purposed for consumer mobile broadband services. And just for good measure, it should speed its decision-making process for private spectrum transactions pending before the agency.

A vibrant digital economy requires a regulatory framework that promotes 21st-century wireless and wireline infrastructure. Today, incumbent local exchange carrier wireline networks remain stuck in the past century in terms of technology and regulation. These copper-based networks, first deployed in 1878, were designed primarily to provide voice telephone service when no other network or voice service was available to a consumer. While consumers today communicate using many alternative broadband services and providers — including voice over IP (or VOIP), wireless, email, text and gaming platforms — FCC rules require only incumbent telephone companies to maintain and operate two redundant networks — the old copper network and the advanced high-speed broadband IP networks to which millions of consumers are migrating.

The full op-ed is definitely worth checking out.

More Bands on the Way

By Brad

Via Phil Goldstein of Fierce Wireless, the FCC is aiming to free up some significant frequencies for wireless use within a year:

The FCC signaled it plans to auction new spectrum blocks, the 1695-1710 MHz band and the 1755-1780 MHz band, as early as 2014, giving the CTIA and wireless carriers another victory in their quest to free up more radio waves for mobile broadband.

FCC Chairman Julius Genachowski wrote about the planned auction in a letter to Lawrence Strickling, head of the National Telecommunications and Information Administration. By law the FCC needs to notify the NTIA at least 18 months prior to the start of any auction.

The Great Online Video Migration

By Brad

Speaking of milestones, online video service YouTube has hit a rather big number. As USA Today reports:

YouTube says more than 1 billion people are now visiting its online video site each month to watch everything from zany clips of cute kittens to sobering scenes of social unrest around the world.

YouTube has always been popular, but a billion people a month is quite the achievement. It also highlights the major shift in viewing habits, with more and more people turning to online video — especially on mobile devices — for entertainment and information. Keeping up with this consumer migration will require a smart path forward from both providers and the government. As our own Jamal Simmons wrote yesterday:

As media companies look for new ways to deliver content directly to mobile devices, wireless companies and the FCC should find new ways to provide the broadband capacity for consumers to enjoy these choices. It is critical that we have a regulatory environment that encourages innovation like freeing up spectrum and exploring the transition to all-IP networks which holds great promise for satisfying consumer broadband demand.

McDowell Moving On

By Brad

FCC Commissioner Robert McDowell, who has been a strong supporter of Internet freedom and allocating more spectrum for wireless use, has announced he is leaving the Commission. As Brendan Sasso of The Hill reports:

“Rob McDowell has been an extraordinary colleague — deeply knowledgeable about the vital and growing communications and tech sector, creative, wise, and a great partner on the Commission,” Genachowski said, adding that he was essential for “landmark reforms,” including overhauling the multibillion-dollar Universal Service Fund and efforts to provide more frequencies for cellphone carriers.

Interestingly, McDowell was regarded as the top pick to head the FCC if Republican Mitt Romney had been elected president last November.

Satisfying Consumer Broadband Demand

By Jamal Simmons

Brian Stelter of the New York Times recently reported ABC is working on an app for live streaming shows to mobile devices. According to the report, “The app, which would stream programming to the phones and tablets of cable and satellite subscribers, could become available to some subscribers this year.”

As media companies look for new ways to deliver content directly to mobile devices, wireless companies and the FCC should find new ways to provide the broadband capacity for consumers to enjoy these choices. It is critical that we have a regulatory environment that encourages innovation like freeing up spectrum and exploring the transition to all-IP networks which holds great promise for satisfying consumer broadband demand.

WIPP on Spectrum

By Brad

Over at the Women Impacting Public Policy (WIPP) blog, Barbara Kasoff highlights a recent speech from FCC Commissioner Jessica Rosenworcel on spectrum policy:

[Rosenworcel] touted the upcoming incentive auctions as critical for putting more licensed spectrum to work for consumers and urged the FCC and Congress to speed their efforts. She also gave a shout out to the unlicensed spectrum for Wi-Fi and to secondary market transaction that move spectrum directly and quickly from a company that isn’t using it aggressively to another that is eager to put it to work. Secondary market transactions are the essence of pro-consumer policy because they make it possible for consumers to enjoy the services they want most.

Kasoff goes on write that WIPP (which is one of our members) strongly agrees with spectrum policies that “involve competition, flexible use of licenses and presumption of renewal when something facilitates investments in networks, as well as secondary markets.” We also agree.

Percentage of the Day

By Brad

25%, which is the amount of American teenagers who now access the Internet on smartphones, according to new results from Pew. As Cecilia Kang of the Washington Post reports:

These young users between the ages of 12 and 17 stand out from adults. About 25 percent of teens use their cellphones to access the Internet, compared to 15 percent of adults.

Pew said this group of “cell-mostly” Internet users portend an explosion of mobile Internet use in the future.

“This is the first time we have measured the cell-mostly population among teens, and we expect this to be an important measure moving forward,” said Mary Madden, a researcher at Pew.

That bolded section from Kang’s article is key. Given that wireless providers are already flirting with capacity on their airwaves, it’s no wonder allocating more spectrum and the transition to all-IP networks are near the top of the FCC’s to-do list.

Swanson on Spectrum

By Brad

At his blog Maximum Entropy, Bret Swanson (who is one of our Broadband Ambassadors) writes about a recent op-ed from FCC Chairman Julius Genachowski in the Wall Street Journal:

Chairman Genachowski is right to herald the incentive auctions that could unleash hundreds of megahertz of un- and under-used spectrum from the old TV broadcasters. Yet wrangling over the rules of the auctions could stretch on, delaying the the process. Worse, the rules themselves could restrict who can bid on or buy new spectrum, effectively allowing the FCC to favor certain firms, technologies, or friends at the expense of the best spectrum allocation. We’ve seen before that centrally planned spectrum allocations don’t work. The fact that the FCC is contemplating such an approach is worrisome. It runs counter to the policies that led to today’s mobile success.

Swanson’s full post is worth checking out, as is a recent post from our own Bruce Mehlman on Genachowski’s spectrum vision..

Tech & Texas

By Bruce Mehlman

The city of Austin is some 1,500 miles away from Washington, D.C., but during my time at the South by Southwest tech conference over the weekend, I couldn’t help but see a strong connection between what was happening at the conference and what is currently being debated inside the Beltway.

SXSW is all about startups, gadgets, and apps, and this year’s conference was especially heavy on the hardware. From wearable computers and smart thermostats, to new game consoles and miniscule cameras, cool devices were everywhere. Exploring the conference, you can’t help but think over and over again that we live in truly amazing times. But as a tech policy wonk, I was constantly reminded there are crucial issues on the table in Washington that could have a dramatic effect on the gadgets of tomorrow.

One is the critical need for more spectrum for mobile broadband providers, a problem the FCC’s upcoming incentive auctions could go a long way toward solving — as long as they are open to all bidders.

The other is the coming transition to all-IP networks, and the regulatory hurdles that could slow the process down. Last week, FCC Commissioner Ajit Pai said he strongly supported pilot programs to explore sun-setting legacy copper network in favor of IP. Hopefully, his fellow Commissioners agree.

If SXSW attendees this past weekend thought about the networks that power all the cool devices on display, they were probably focused on signal strength or how fast a tweet made it off their smartphone. Mobile broadband has come so far so fast that it’s already close to an afterthought. But without ongoing investment and smart policies, all the innovation on display in Austin could be hampered by congested networks and red tape applied 1,500 miles away. SXSW is an event where cool ideas take off. Washington is a place where regulatory hurdles can easily ground ideas before they have a chance to leave the runway.